Compromised healing of skeletal injuries is associated with increased morbidity and decreased functional status, and each year surgical orthopedic treatments are performed on over 800,000 fractures with impaired healing. Inadequate blood supply is a major cause of impaired healing in all types of orthopedic treatments. Bone morphogenetic protein 2 (BMP2) plays an essential role in promoting mesenchymal stem cell (MSC) osteogenic differentiation; while vascular endothelia growth factors (VEGFs) play crucial roles in the recruitment and differentiation of vascular endothelia cells (ECs). Currently, it is commonly accepted that BMP2 is either produced by MSCs and osteogenic cells or is proteolytically released from sequestered stores in the extracellular matrix. Our preliminary studies with transgenic mice have shown that ECs that line vessels adjacent to both fracture and osteotomy sites, and within bone repair tissues, are the main source of BMP2 at the repair site. VEGFs have also been shown to function in bone healing however, whether they act in a direct manner via receptor-mediated signaling in osteogenic cells is highly debated. Other preliminary work from our laboratory has shown that while differentiated osteoblasts abundantly express VEGF(s), exogenously added VEGF(s) neither promote MSC osteogenic differentiation nor enhance differentiated osteoblast function. Collectively, these data lead us to the following hypothesis: The development of vascular and bone tissues during post natal bone repair and regeneration is regulated through a positive paracrine feedback loop, which is established through the expression of BMP2 by ECs and VEGF expression by osteogenic cells. This hypothesis is a paradigm shift from prior general beliefs about the cell sources and functions of BMP2 and VEGF during bone repair. A murine model of distraction osteogenesis (DO) will be used to address this hypothesis. DO has three advantages for the proposed studies: a) new bone formation occurs primarily through an intramembranous process devoid of extensive cartilage; b) it is an extremely robust regenerative model capable of inducing immense amounts of highly vascularized bone tissues; c) it is successfully used in the clinical setting to treat some forms of nonunions in the absence of BMP2 treatment. Aim 1 will define the functional relationship between vessel morphogenesis and the induction of BMP2 in endothelial cells by altering vascular morphogenesis through blocking VEGFR 1 and 2 activities. Using transgenic mice containing a conditionally inducible Cre gene that is selectively expressed in endothelial cells, the development of nascent endothelial cells will be tracked within new vessels and co-localized to the cell populations that are expressing BMP2. Aim 2 will use these same transgenic mice to assess the functional role of BMP2 expression by endothelial cells in the formation of bone and vascular tissues by BMP2 gene ablation in ECs during the different phases of DO. The completion of Aims 1 and 2 will determine if ECs are a primary cell source of BMP2 in regulating skeletal healing after surgery or injury and if BMP2 has a functional role in vasculogenesis.